KSE-100 index emerges as Asia's 'best performing market'

In a positive development reflecting impressive resilience, Pakistan's stock market has outperformed its Asian peers to emerge as the best-performing market in the continent in the ongoing year 2024, reported Bloomberg.

Strategists are of the view that the market is expected to show more gains due to having one of the cheapest valuations in Asia along with the recently proposed budget whose layout prioritises securing a new loan from the International Monetary Fund (IMF).

Meanwhile, a stable rupee and easing inflation have further increased the prospects of rate cuts.

Topline Securities Ltd and Arif Habib Ltd are of the view that the KSE-100 index has outperformed other Asian stock markets showcasing a 27% increase in dollar terms in 2024 with the gains further expected to increase by another 10% by the end of this year.

Commenting on the KSE-100 Index's performance, Head of Research at Dubai-based Frontier Investment Management Partners Ltd Ali Hussain said; "There's a lot of juice left in this rally [...] cheap valuations, high positive real rates and a fairly valued currency make a very attractive case right now."

Despite recording new record highs recently, the KSE-100 index has managed to remain cheap with a one-year forward earning-based valuation of 3.8 times — a 50% discount to its lifetime average.

It is to be noted that Islamabad has increased taxes on various industries such as those of cement, automobile and steel, to address the government's financial needs as it strives to fulfil the IMF's guidelines as the lender's programme holds key significance if the country is to meet its $24 billion debt payments due in next fiscal year.

Bloomberg Economics has underscored the political stability with the possibility of the coalition government being toppled if the Pakistan Peoples Party (PPP) decides to walk away due to public pressure in light of the government's measure to comply with the Fund's conditions.

However, investors remain hopeful with securities firm Arif Habib predicting that the foreign buying, earnings growth and robust local liquidity will drive the market momentum for the next couple of years.

According to Institutional Equity Sales head at Arif Habib Ltd Bilal Khan: "With the new IMF program spanning the next three years, we anticipate a favourable external position, supporting continued bullish market sentiment."